Solar cell safeguard duty put on hold

Prelims level : Economy / Mains: Paper - III Indian Economy Mains level :
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  • The government issued a notification putting on hold the imposition of the safeguard duty on the import of solar cells from China and Malaysia.


  • The Centre had imposed a safeguard duty of 25% on solar cells imported from China and Malaysia for the period from July 30, 2018, to July 29, 2019, following which the duty was to be reduced to 20% for the next six months, and further to 15% in the six months following that.
  • Several firms filed writ petitions in the Orissa High Court against the imposition of the duty.
  • It has been decided not to insist on payment of safeguard duty,
  • the Department of Revenue, Finance Ministry said in the notification, citing the stay order.

Safeguard Duty:

  • Sudden increase in imports as a result of trade liberalization can put strain on domestic industries.
  • Safeguards are a type of safety-valve built in to the WTO to protect domestic producers temporarily while they adjust in order to become more competitive with foreign producers.
  • A safeguard is a form of temporary relief.
  • They are used when imports of a particular product, as a result of tariff concessions or other WTO obligations undertaken by the importing country, increase unexpectedly to a point that they cause or threaten to cause serious injury to domestic producers of “like or directly competitive products”.
  • Safeguards give domestic producers a period of grace to become more competitive vis-à-vis imports.
  • Safeguards usually take the form of increased duties to higher than bound rate or standard rates or quantitative restrictions on imports.

Way Forward:

  • The country’s manufacturing sector on solar panels can be improved to produce domestic products competitive with foreign products.
  • Private industry could form a consortium to venture into domestic manufacturing. The government should support such initiatives and the industry through various incentives and facilitate the industry by giving special incentives in the modified special incentive package scheme (M-SIPS), low-cost finance and low-tariff power similar to China.
  • Th environment in terms of infrastructure and policies can be improved.
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